I missed this important Cap Times/Mike Ivey article back on May 30, that explains in detail why a $650 million budgeted tax cut is the height of irresponsible legislation, propose ironically by a former accountant.
The 2013-2014 budget is game of Jenga, on steroids, using taxpayer money. State Rep. Dale Kooyenga, R-Brookfield grand scheme will only make taxpayers more frustrated and angry, but maybe that’s the point. That allows Republicans to make more cuts later on in support of their failed system. Point 5 in the article explains:
5. Slashing income taxes on the wealthy sets up the state for future revenue shortfalls, which could provide the justification for future cuts in spending on things like education or public employee salaries and benefits.
See…all by design. You might remember when Sen. Albert Darling was asked by a reporter what would happen if the Republican budget failed? She said that they would just have to make more cuts.
Democrats would be wise to expand beyond the poor job numbers and focus on all the items listed below. We were warned.
1. It is using a one-time surplus based on future projections for a permanent income tax rate reduction: But as the Wisconsin Taxpayers Alliances notes, a lot of that new-found money is primarily due to taxes on non-wage business and investment earnings, in part from a recovering stock market. In fact, income tax withholding from wages paid to workers has been relatively weak, the LFB reports.
2. It changes what had been a fairly progressive state income tax system and makes it much more regressive: The GOP plan takes what had been five income tax brackets in Wisconsin and reduces that to three, creating a very broad middle bracket that lumps together low-wage earners and CEOs … someone working for $8 an hour at a fast-food restaurant would pay the same effective income rate as a corporate executive making $250,000 — even before the deductions kick in that help the wealthy.Robert Kraig of Wisconsin Citizen Action notes “This is a stunningly unfair proposal,” he says. “It makes a tax system that is already rigged against the middle class and working Wisconsinites even worse.”3. The credits being eliminated don’t come anywhere close to making up the projected $787 million in reduced tax collections over the two-year budget: Kooyenga eliminates more than a dozen narrowly-designed tax credits worth about $5 million … Republicans have been cutting things aimed at helping lower-income taxpayers such as the Earned Income Tax Credit or the Homestead Tax Credit. In fact, the last budget cut $56.2 million from EITC, which Ronald Reagan once called “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”
4. Factory and farm owners in Wisconsin are already virtually exempt from state income taxes: An item tucked into Walker’s first budget already provides a tax credit for manufacturing and agriculture business owners in the state, which when fully implemented by 2017 will effectively eliminate income taxes for those specific groups. The “domestic production tax credit” will deliver an estimated $360 million in tax savings to manufacturers over the next four years and some $130 million each year thereafter. Still, critics have called it one of the largest income tax windfalls in state history — and one that few people know much about.